Mortgages over 50 not so easy to secure

You may find that getting a mortgage over the age of 50 isn’t so easy.

Small replica house beside mortgage papers

Whether you’re downsizing, starting out on your own again or simply moving to a new home, you may find that getting a mortgage over the age of 50 isn’t so easy. 

Even with a healthy credit rating and large deposit, lenders now apply a much more stringent lending criteria to mortgage applications and being over 50 means a home-loan approval is not guaranteed. 

Regardless of the fact that it is universally accepted that people will work longer, the main stumbling block is simply that you may not be working or, indeed, living long enough to pay back what you have borrowed. It’s no longer enough to have the equity in your home as a guarantee to your lender that it will get its money. You may have to provide an exit strategy to convince your lender that you will be able to repay the debt before you retire. Or, settle for a mortgage of a shorter duration than the standard 30 years, which will of course mean higher monthly repayments. 

While the Age Discrimination Act and the National Consumer Credit Protection Act means that a person cannot be denied a mortgage based purely on their age, lenders do have a responsibility to ensure that a loan can be repaid and that borrowers are not put under financial stress by having to pay a mortgage. 

And the older you get, the more difficult it becomes. So, if you’re considering applying for a mortgage, what can you do to ensure the process is as easy as possible? 

  • Consider how much you can comfortably afford to repay and factor in a higher interest rate of around eight per cent to your calculations. This is what lenders will do and, consequently, people are finding that they can borrow less than they originally thought. 
  • Make sure your credit history is squeaky clean and don’t apply for credit unless you really need it. The introduction of comprehensive credit reporting will help those with a good credit history but it will also punish quite harshly those who have been a little wayward. 
  • Have a sizeable deposit. The standard deposit of 20 per cent may not be enough to secure you a mortgage offer, so the more money you can pull together, the better.
  • Your savings could be your saviour. As with first homebuyers, if you can prove you have a good record of saving, the more likely you will be successful with your application.
  • Get your paperwork in order. Gather together details of all your investments, superannuation, savings, bank accounts and, of course, money that you owe, as the more you can demonstrate you’re in control of your finances, the better your chances of securing a loan.
  • Consider how you will repay your debt if you have to stop work or die. Lenders will want to know you have an exit strategy so they can be sure they will see their money returned.
  • A broker may be the way to go. If you’re unsure of how best to apply for a mortgage, a broker can not only help you through the process but will also ensure you apply to the lender that offers you the best chance of securing a mortgage offer. 


While securing a mortgage once you’re over 50 may be more difficult, it’s not impossible. The sooner you start planning and getting your house in order (pardon the pun), the best chance you give yourself of stepping foot inside your new home. 

Have you had difficulty in obtaining a mortgage? If so, how did you get around the issue? Or are you still struggling to get a home loan?





    COMMENTS

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    Jude
    12th Jan 2016
    11:20am
    As a Mortgage & FInance Broker in business for 15 years, I have to concur with your article, but believe me, things are only getting worse for older borrowers. It seems that as rates drop, banks become more difficult to deal with. Knowing the reasoning behind their decisions does not help either. I wish they would treat every person on their merits, rather than each lender Having an AGE POLICY - the very term is insulting!
    At the end of the day, most of those >50 or 60 have a record of repaying on time every time. Many would rather not eat than miss a payment.
    Fortunately there are still some lenders who will consider these people, so yes - use a broker by all means. We have to perform or we do't get paid (by the Lender of course - most of us do not charge a fee to borrowers), so if we want to eat, we work hard for each and every client!
    KSS
    12th Jan 2016
    2:11pm
    " It seems that as rates drop, banks become more difficult to deal with."

    Well the easy solution: Don't use the banks!
    LiveItUp
    12th Jan 2016
    2:27pm
    I don't have any trouble dealing with the banks. I went to see a mortgage broker once and they told me I could only borrow a very small amount of money from a certain bank. I asked the bank about it and they asked me how much did I needed and then offered a lot more.
    Sundays
    12th Jan 2016
    12:18pm
    Likewise for credit cards. I paid mine off when I retired, but the bank officer advised me not to cancel it in case I needed it for emergencies as she said I may not get another one even though I have always had a good credit rating
    ozrog
    12th Jan 2016
    12:34pm
    Never had any problems neither have people i know. Its the younger ones where brokers want parents to go guarantee to secure a loan.
    LiveItUp
    12th Jan 2016
    2:09pm
    No problem borrowing all the money I want.

    Decided to check out my credit rating. One could not be found for me. So I asked my bank if they ever checked my credit rating and was told no it wasn't necessary.
    KSS
    12th Jan 2016
    2:09pm
    I had no problem getting a mortgage at age 55 or in refinancing 4 years later. It all comes down to capacity to repay the loan. If you can show that you can, then there is no reason why you wouldn't get the loan you want.

    12th Jan 2016
    9:34pm
    People over the age of 50 have grown up with, and continued to ascribe to, a moral work ethic. It is as simple as that! Deals sealed with a handshake and a person's word his/her guarantee of trust. This has changed and now the ball game is different - with money having to be upfront and trust BOUGHT with the number of "readies" you're holding. A sad, but true, fact in most current business negotiations.
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